Find the future values of the following ordinary annuities: a. FV of $400 paid each months for 5 years at a nominal rate of 14% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ b. FV of $200 paid each months for 5 years at a nominal rate of 14% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur? -Select- -Select- V The nominal deposits into the annuity in part (b) are greater than the nominal deposits into the annuity in part (a). The annuity in part (a) is compounded less frequently; therefore, more interest is earned on previously-earned interest. The annuity in part (a) is compounded more frequently; therefore, more interest is earned on previously-earned interest. The annuity in part (b) is compounded less frequently; therefore, more interest is earned on previously-earned interest.

Find the future values of the following ordinary annuities: a. FV of $400 paid each months for 5 years at a nominal rate of 14% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ b. FV of $200 paid each months for 5 years at a nominal rate of 14% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur? -Select- -Select- V The nominal deposits into the annuity in part (b) are greater than the nominal deposits into the annuity in part (a). The annuity in part (a) is compounded less frequently; therefore, more interest is earned on previously-earned interest. The annuity in part (a) is compounded more frequently; therefore, more interest is earned on previously-earned interest. The annuity in part (b) is compounded less frequently; therefore, more interest is earned on previously-earned interest.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 20E

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